Merger Monday

One of the signs of a good market is the willingness of mergers and acquisitions. This often means that there’s plenty of money out there and stocks are still cheap. Today’s merger news is the probably the catalyst that has pushed the Dow over 11,000 this morning.
For example, the California Pizza Kitchen (CPKI) said that its board has authorized a “strategic review.” That’s a fancy way of saying “the bidding starts…NOW.” Personally, I don’t quite understand many of these theme restaurants but they seem pretty popular so what do I know?
The other news is that Cerberus Capital Management LP is buyingDynCorp International (DCP) for $1.5 billion. The deal represents a 49% premium for DynCorp’s stock. Not bad.
The biggest news is the marriage proposal between Mirant (MIR) and RRI (RRI). The new company will have the hideously ugly name GenOn Energy. I’m going to factor in a 10% price discount based on the name alone. Still, I expect to see more mergers in this space.

Posted by on April 12th, 2010 at 10:05 am


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